The government has made up its mind to revive Sindri Fertilizers. The plant, which has been lying idle for several years, will be handed over to Steel Authority of India Ltd. It’ll be a tough challenge for the steel maker to operate the mothballed fertiliser plant successfully. It is perhaps a good time to revisit the historical significance of Sindri. Jawaharlal Nehru, India’s first prime minister, firmly believed that the public sector alone could transform India from a poor agrarian country to a modern industrialised one. The private sector, he felt, was driven by the profit motive and not by the national interest. Sindri was among his first experiments with the public sector.
The Bengal famine of 1942 had ravaged the countryside. Two million men, women and children had died of hunger. Cattle in several districts had perished altogether. The government’s hands were tied: the naval blockade had kept imported grain from reaching the affected areas by sea, there wasn’t surplus grain available in other regions of the country, and trains were all booked for the movement of troops.
The need was felt that India should raise its farm output if such calamities were to be avoided. This would fill the government’s silos from which grain could be released in times of shortages. One way to improve output was to use synthetic fertilisers. Indian farmers had so far depended largely on organic manure in their fields. With synthetic fertilisers, there was consensus, they could produce more. The Foodgrain Policy Committee in July 1943 had estimated that the country would require between two and three million tonnes of such fertilisers in a year. Hence, it recommended that a factory that could produce 250,000 tonnes of nitrogenous fertilisers should be set up. Later in the year, the War Resources Committee said that it should be a state-owned factory.
The first task was to find the right location for the factory. The criteria were that it should be close to coal reserves and should have adequate supplies of water and electricity. To help find a site, the government approached Imperial Chemical Industries (ICI), the largest fertiliser company in the United Kingdom. A team of three came from ICI in June 1944 and submitted its report five months later. They had selected Sindri on the banks of the Damodar, 15 km from Dhanbad, the centre for coal mining in India. Chemical Construction Company of the United States was employed to make the designs of the factory, supervise its construction and see it into production. Power Gas Corporation of the United Kingdom was contracted to supply the plant. Work started in 1947 and ended in 1951.
But there was a hitch: while the initial project cost was Rs 10.53 crore, Sindri had cost the government over Rs 23 crore. Mr Nehru’s detractors – the list included not only businessmen but also several right-wing leaders – had a hawk’s eye on the venture. The newspapers wrote endlessly on the subject; there was uproar in Parliament. How could Mr Nehru justify such inefficient use of meagre resources? If these were the project implementation skills of the government, heavens help if it starts to run the factory. The episode threatened to give Mr Nehru’s rivals enough fodder to derail his socialist policies.
Mr Nehru had to act quickly and decisively. In spite of his general dislike for businessmen (“I must frankly confess that I am a socialist and a republican and am no believer in kings or princes, or in the order which produces the modern kings of industry, who have greater power over the lives and fortunes of men than even the kings of old, and whose methods are as predatory as those of the old feudal aristocracy,” he had said at the 1929 session of the Congress at Lahore), he decided to induct two from the corporate world on the Sindri board: Lala Shri Ram of DCM and J J Ghandy of Tata.
The two took an independent line from the very first day. Mr Ghandy wrote to C C Desai, the then secretary in the ministry of works, production and supply and the chairman of Sindri, on February 12, 1952: “It occurs to me that an attempt has been made in the articles of association to compromise between the authority of a limited liability company and complete departmental control of the activities of the company.” He pointed out that the articles laid down that the President will approve all borrowing, fix salaries of all directors, clear all executive appointments of Rs 2,000 per month and above, and direct all allocations of profits to reserves.
Mr Desai, in his letter of March 4, admitted that the provisions were unsatisfactory “which appear to detract from the supremacy of the directors” but said that these would not hinder the independent functioning of the board. “They are more in the nature of experimental provisions at this stage of infancy of industrial enterprise in the public sector to dovetail the freedom and elasticity of the company form of management and the ultimate responsibility of Parliament, of which the government cannot divest itself.” Thus began Sindri, torn from the word go between efficiency and duty to the nation.
